Javascript on your browser is not enabled.

Advertisement

Abhayanad Singh

Abhayanad Singh is co-founder at Muvizz.com. He is a young dynamic entrepreneur who completed his management from Chetana Institute of Management and Research. More than a decade of experience across various industries including banking, finance, pharma, art, furniture, software and media he has taken everything in his stride. He has worked both in a corporate environment managing investments for HNIs as well as an entrepreneur running a family office for a set of investors.

More From The Author >>

How GST Will Reshape/Affect Indian Startup industry?

The only drawback with the usage of GST in the market is that due to no tax differentiation between items & services under proposed GST regime the rich may become richer, and poor become poorer resulting bad situation.

In India, the startup ecosystem has bloomed over the years owing to various factors like growing foreign investments, technological advancements, unique business ideas, government schemes etc. According to NASSCOM’s 2016 report, India ranks third globally with over 4,750 startups and the number is said to increase further to 10,000 by 2020. It has become an important sector of the economy that provides various opportunities to young India. The Goods and Service Tax (GST) GST on the other hand, has been a topic of discussion for over a year now there have been multiple predictions and speculations on how the bill will affect various fields of work. Entrepreneurs of startups, as well as established businesses have been looking forward to the usage of the bill in practice. The GST bill which is going to systemize and unify taxation in India by merging many individually applied taxes into a single tax is said bring relief to startups. However, there is a lot of conjecture whether our nation which still undergoing the aftermath of monetization will be able to sustain this transformation.

• Streamlining the tax structure: The GST proposal is said to reduce confusion of entrepreneurs as far as tax laws are concerned. Indian states have very different laws which can be confusing for companies having a pan-India presence. Some states do not require them to register for VAT while some pay same tax on delivery as well. Since GST will subsume VAT and other taxes, startups will only have to comply with a single nationwide tax. This will make our country a consolidated market.

• Limited registration: As per the current tax laws, any business making deals in goods with a yearly revenue of INR 10 lakhs has to be registered under the home state tax laws and get a tax identification number. For service providers, this limit is set at INR 9 lakhs. The GST Council though, has chosen to set the limit for registration at INR 20 lakhs, making India an integrated economy where we can witness an upsurge in manufacturing startups.

• Going digital: GST aims to make taxation transparent and with all tax processes going digital. From taxpayer registration, return submission to tax payments and refund claims, startups can now file details online. Managing all this can be challenging for startups that lack the resources to hire tax experts or a dedicated team for handling compliance. However, they can now rest easy.

• Easy tax refunds: Many startups face the issue of having their assets stuck in tax refunds. However, with GST making the processes easier and transparent, startups can file for tax refunds online and hope to get their money on time. They can then invest these funds for other purposes like manufacturing, manpower or marketing of their startup.

• Credit score: In the future, GST is set to enable financial inclusion in the economy. Startup community migrating towards digital accounting and optimization of existing processes, will be better inclined towards fulfilling the eligibility criteria for credit facilities.

The only drawback with the usage of GST in the market is that due to no tax differentiation between items & services under proposed GST regime the rich may become richer, and poor become poorer resulting bad situation. Also, the GST rule may bring up the issue of compliances to new procedures. here is likely to be some increase in compliance costs. However, these are minor hardships for startups that shall easily bear in time and then we will witness the true long term benefits of GST.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


Tags assigned to this article:
gst

Around The World

Advertisement